Health Care

Metro Health negotiates equity partnership with Community Health Systems

September 19, 2013
| By Pete Daly |
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Metro Health 'not for sale', but it could be acquired
Metro Health Hospital in Wyoming is a 208 bed general acute care and osteopathic teaching hospital that serves more than 130,000 patients. Photo via fb.com

The Metro Health board of directors has decided to explore a strategic equity partnership with Community Health Systems, a publicly held health care system with 135 affiliated hospitals across the U.S.

A potential equity partnership between Metro Health and CHS would provide access to capital and additional operational and clinical resources for Metro Health, according to a Metro Health announcement.

Discussions on a potential relationship will include the Cleveland Clinic, which entered into a strategic alliance with Franklin, Tenn.-based CHS earlier this year.

Community Health Systems

CHS (NYSE: CYH) operates general acute care hospitals in non-urban and mid-size markets throughout the country.

Directly or through its subsidiaries, CHS owns, leases or operates 135 hospitals in 29 states with a total of about 20,000 licensed beds.

Community Health Systems Professional Services Corporation, a subsidiary of CHS, provides management services to the affiliated group of hospitals and is party to the agreements with Cleveland Clinic.

Affordable Care Act

Metro Health announced in October 2012 that it was beginning an active search for a “strategic partner” to allow it to “continue to accelerate its growth” in view of rapidly changing conditions in the health care industry, especially with the impact of the Affordable Care Act.

Metro Health president/CEO Mike Faas said this week that the talks with CHS are “an important part of the work we are doing to ready our organization for the changes occurring under the Affordable Care Act and to position Metro Health for long-term success and growth."

"Metro Health is a strong and progressive health care organization, and like many other community hospitals and health systems aligning with partners, we can see the potential advantages of scale, access to national resources and the sharing of best practices," added Faas.

Letter of intent

Metro Health board of directors Chairman Doyle Hayes said that after considering many organizations “that expressed interest in working with Metro Health, the board has directed management to pursue exclusive negotiations with Community Health Systems, with the goal of signing a letter of intent, the first step toward a potential affiliation between the organizations.”

Hayes said the board had extensive discussions on what each potential partner would bring to Metro Health and West Michigan.

The quality of health care provided by CHS and by Cleveland Clinic, including access to the best medical experts, its global reputation and the “overwhelming” satisfaction rankings, set the offer apart, according to Metro Health.

Upon execution of a letter of intent, the parties would conduct due diligence and additional negotiations over the terms of a definitive agreement, which would be subject to regulatory review before finalizing any relationship.

Health care “momentum”

Faas said an equity partnership for Metro Health “has the potential to be one of the most positive developments to happen in Grand Rapids in recent years. Building on the impact of the MSU Medical School, the great research work being done at Van Andel Institute and the expansion of other health care systems, Metro Health is excited about the opportunity to continue the positive momentum happening in our community."

Metro Health, the smallest of the three acute care hospital organizations in Grand Rapids, serves more than 250,000 patients annually and owns and operates a 208-bed hospital.

More than 500 physicians are on the Metro Health staff and many are members of the Metro Health Medical Group.

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